Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd

Background matters 4 Accor raised two causes of actions in the Court below: trade mark infringement, and misleading or deceptive conduct (by representations). The trade mark infringement cause of action related to "Harbour Lights" and "Cairns Harbour Lights" which were registered trade marks under the Trade Marks Act 1995 (Cth) (the Act). As to this cause of action, the respondents brought cross-claims in which they sought the removal or the cancellation of the trade marks under s 88 of the Act. A number of grounds were raised in the cross-claims and the two most significant were that the appellants were not the owners of the trade marks and that the trade marks did not satisfy the requirements of s 41 of the Act (i.e., the trade marks were not capable of distinguishing the appellants' services). 5 The second respondent, Ms Patalano, is the sole director and shareholder of the first respondent, Liv. Liv conducts a business which it had purchased from the third respondent, Ms Bradnam, under a contract of sale entered into in August 2009. Settlement took place on 17 May 2010 (substantive reasons at [283]). 6 Following a trial, the primary judge made various orders, the most significant of which were as follows. First, the trade mark register was to be rectified by cancelling the trade mark, "Cairns Harbour Lights" (order 1). Secondly, the trade mark register was to be rectified by amendment so as to remove certain services in respect of which the trade mark, "Harbour Lights" is registered (orders 2 and 3). Thirdly, an injunction was granted against Liv restraining it from using certain words and phrases as a trade mark in connection with hotel accommodation services in Australia and commercial real estate agency services in Australia (order 5). Fourthly, an injunction was granted against Liv restraining it from making specified representations in connection with its business (order 6). This order was the outcome of the substantial misleading or deceptive conduct case which Accor brought against the respondents. The primary judge organised Accor's misleading or deceptive conducts claims into 16 categories of alleged representations and he found that only two categories were made out against Liv. The primary judge found that none of the allegations were made out against Ms Patalano and that Accor's case that Ms Bradnam was an accessory to the contraventions was not made out. Liv has not appealed against order 6 and it is to stand. For their part, the Accor parties' appeal relates only to its trade mark infringement case and they do not appeal against the rejection of a substantial part of their misleading or deceptive conduct case. These circumstances concerning Accor's misleading or deceptive conduct case will be relevant when we come to consider the costs of the proceeding at first instance. Fifthly, the primary judge ordered that the application be otherwise dismissed (order 7). Sixthly, the primary judge ordered that the cross-claim be otherwise dismissed (order 8). Finally, Accor was ordered to pay 40% of the respondents' costs of the proceeding (order 10). 7 Accor was largely successful on the appeal and the respondents unsuccessful on the cross-appeals. The parties are agreed that there is to be an order that the appeal be upheld and, except for order 6 relating, as we have said, to the misleading or deceptive conduct case, all of the primary judge's substantive orders are to be set aside. The parties are agreed that an injunction should be granted to restrain the use of certain words and phrases as a trade mark in relation to the services in respect of which the trade marks are registered, but Accor contends that the injunction should be granted against all of the respondents, whereas the respondents contend that the injunction should only be granted against Liv. The parties are agreed that the registration of three domain names should be cancelled, but the respondents seek a stay of that order to accommodate a possible application for special leave to appeal to the High Court. The parties are agreed that there should be an order that the cross-claim be dismissed and an order that the cross-appeal be dismissed. As we have said, the parties are not agreed as to the appropriate orders as to the costs of the proceeding at first instance and the costs of the appeal and cross-appeals.

The FInal Orders other than the ORDERS as to costs 8 At first instance, all of the respondents were represented by the same counsel, although the first and second respondents, Liv and Ms Patalano, were represented by one firm of solicitors and the third respondent, Ms Bradnam, was represented by a different firm of solicitors. 9 We are of the opinion that the injunction should be granted against all respondents. Ms Patalano is the sole director and shareholder of Liv. She is the registered owner of the domain name, harbourlightscairns.com. Ms Bradnam is the previous owner of the business and was the registered owner of all three domain names. She retains the ownership of the two domain names, cairnsharbourlights.com.au and harbourlightscairns.com.au (substantive reasons at [13] and [15]). Ms Patalano took an active role in defending the proceedings at first instance (she filed her own notice of cross-claim seeking cancellation of the trade marks and a declaration of non-infringement) and the appeal (she filed her own notice of cross-appeal and, with the first respondent, Liv, filed a notice of contention). Ms Bradnam did likewise. It seems to us that the injunction should be granted against all three respondents in circumstances where all three respondents have chosen to challenge vigorously Accor's rights, both at trial and on appeal. 10 We would grant a stay but only for a period of 35 days. We think it appropriate to grant a stay to preserve the position should the respondents wish to file an application for special leave to appeal. However, we do not think that this Court should be granting what at this stage could be a long term stay. The question of a longer term stay can be considered if, and in light of, any application for special leave to appeal which might be filed by the respondents.

The orders as to costs 11 The Accor parties seek their costs of the proceeding at first instance, including the cross-claim, and their costs of the appeal and the cross-appeals. The essence of the approach advanced by the Accor parties is that, having regard to the Full Court's reasons and the final orders to be made, they had succeeded at first instance and on appeal. The Accor parties submitted that costs should follow the event and the Court should be slow to apportion costs merely because not all of Accor's arguments "that were advanced in support of their position (both at trial and on appeal) were accepted". The Accor parties referred to cases such as Ruddock and Others v Vadarlis and Others (No 2) (2001) 115 FCR 229 at [11] and Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 90 ALJR 270; (2015) 327 ALR 192; [2015] HCA 43 at [6] per French CJ, Kiefel, Nettle and Gordon JJ. 12 By contrast, the respondents submitted that an apportionment of costs or a reduction was appropriate, having regard to the fact that the Accor parties failed or did not succeed on a number of issues, both at first instance and on appeal. As to the proceeding at first instance, they put forward two alternatives as to the appropriate orders. The first is that Liv and Ms Bradnam pay 40% of Accor's costs of the proceeding, including the cross-claim, and Accor pay Ms Patalano her costs of the proceeding. The second is that Accor pay 80% of Liv's costs of the misleading or deceptive conduct claim in the proceeding, and Liv pay 60% of Accor's costs of the trade mark infringement claims and the cross-claim in the proceeding; Accor pay Ms Patalano's costs of the misleading or deceptive conduct claim in the proceeding and the trade mark infringement claims; and Accor pay Ms Patalano's costs of the misleading or deceptive conduct claim in the proceeding, and Ms Bradnam pay 60% of Accor's costs of the trade mark infringement claims and the cross-claim in the proceeding. As to the appeal and cross-appeal, the respondents submitted that the appropriate order is that Liv and Ms Bradnam pay 50% of Accor's costs of the appeal and all of Accor's costs of the cross-appeal. The respondents referred to Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107; Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd and Another (2010) 182 FCR 84 at [17] and other authorities. 13 The matters which the respondents relied on in support of their proposed orders as to the proceeding at first instance were as follows: The Accor parties had only minor partial success against Liv in relation to their misleading or deceptive conduct claim and failed in that case as against Ms Patalano and Ms Bradnam. There was no appeal against that aspect of Accor's case. Although the Accor parties have been substantially successful in the trade mark infringement case on appeal, they should be required to bear their own costs of "the numerous allegations and findings of fact sought against the respondents which were found to have failed". The respondents submitted that the Accor parties relied on 15 examples of first use of the trade marks and were ultimately successful on only one. It is appropriate for us to note at this point that the Court's findings related to the realtor advertisement of 17 December 2015 (at [200]-[233]) and, in the circumstances, it was not necessary for the Court to consider "the various contentions concerning the remaining examples of prior use by reference to the other nominated advertisements" (at [233]). The respondents submitted that the primary judge was asked to consider 49 "examples" of infringement and the allegations made good were limited to those set out in the Court's reasons (at [328]). 14 The matters which the respondents relied on in support of their proposed orders as to the appeal and cross-appeals are as follows: (1) As to ownership and first user, the Accor parties were unsuccessful as to the following arguments: (a) authorship was sufficient to establish ownership; (b) the respondents' good faith defence was not available for leasing, letting and agency services as the Accor parties were first to use the trade mark for other services (commercial real estate agency services); (c) many advertisements made good their claim to first use, but the Accor parties only succeeded on one. (2) As to cancellation or amendment of the registered trade marks, the Accor parties unsuccessfully challenged the primary judge's division of services, asserting overlap in particular. (3) As to infringement, the Accor parties unsuccessfully sought to challenge numerous findings that the respondents had not infringed the trade marks or had only infringed in respect of certain services. The appellants referred to paragraphs 6(a), (b) and (c) and 9(a) and (b) of the notice of appeal. 15 We do not propose to discuss the many authorities of this Court which have considered the circumstances in which costs will be apportioned or reduced because of success or failure on particular issues in a proceeding. It is sufficient to refer to Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27 (at [302]); (2016) 117 IPR 415; Hockey v Fairfax Media Publications Pty Limited (No 2) (2015) 237 FCR 127 (at [122]); and Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 8) [2017] FCA 258 (at [92]). The principles are well-known. 16 We are of the opinion that Ms Patalano should not be immune from an order for costs and, in fact, we are of the opinion that the order for costs against her should be the same as the order for costs against Liv and Ms Bradnam. It is true that she was not held guilty of any trade mark infringements (it appears that no allegation was made against her) or of misleading or deceptive conduct. Nevertheless, she was a party represented by the same solicitors and counsel as represented the company of which she was the guiding mind and hand. More importantly, she played an active part in the proceeding and she aligned herself with Liv's defence and brought her own cross-claim. For example, she sought a declaration that neither she nor Liv had infringed the trade marks and she sought rectification of the register of trade marks (see Appeal Book Part A tab 20 page 133). She played a similar role on the appeal. We have already referred to the cross-appeal she filed and the notice of contention she filed jointly with Liv. 17 As to the costs of the proceeding at first instance, the Accor parties have been substantially successful. However, there are two matters which are sufficiently significant in our view that they must be taken into account on the issue of costs. They are Accor's substantial lack of success in its misleading or deceptive conduct claim and its lack of success in relation to alleged instances of infringement. No doubt there are other failed submissions or allegations of fact, but we do not think that any of these are sufficient to weigh in the balance. It is not uncommon for there to be a failed submission or allegation of fact in any case and a practical and realistic approach must be adopted in determining when such failures are taken into account on the question of costs. In any event, the Court has assessed the matter and we think the two matters we have identified are sufficiently significant to be taken into account. 18 We think that this is an appropriate case for a reduction in the costs otherwise payable, rather than a different order in relation to different issues. This was the approach of the primary judge, albeit on different premises, and we agree that this approach is appropriate (Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2015] FCA 746 at [13]). 19 Having regard to the two matters which we have identified, we think a reduction in the costs of the Accor parties of the proceeding at first instance of 35% is appropriate. 20 As to the costs of the appeal and the cross-appeals, the Accor parties have been almost entirely successful. We are of the opinion that there should be a small reduction to reflect the lack of success of the Accor parties on some allegations of infringement. We think a reduction of 10% is appropriate in relation to the appeal. We do not think the other matters identified by the respondents warrant a reduction.

the orders 21 For these reasons, the Court will make the following orders: (1) The appeal be upheld. (2) Orders 1, 2, 3, 4, 5, 7, 8 and 10 of the orders made on 21 July 2015 be set aside and, in their place, order that: (a) The respondents are permanently restrained from using: (i) "Harbour Lights Cairns"; (ii) "Harbour Lights Luxury Apartments"; (iii) "cairnsharbourlights.com.au"; (iv) "harbourlightscairns.com.au"; and (v) "harbourlightscairns.com", as a trade mark to promote or advertise any hotel accommodation services in Australia (including via websites); from using "Harbour Lights Apartments" as a trade mark to promote or advertise any commercial real estate agency services in Australia (including via websites); and from using any of the descriptions recited at (i) to (v) as a trade mark in relation to any of the services in respect of which "Harbour Lights" is registered as a trade mark or "Cairns Harbour Lights" is registered as a trade mark. (b) Within fourteen (14) days, the respondents take all reasonable and necessary steps to cancel the registration of the domain names recited at (2)(a)(iii) to (v). (c) The operation of order (2)(b) above be stayed for a period of thirty-five (35) days. (d) The cross-claim be dismissed. (e) The respondents/cross-claimants pay 65% of the applicants/cross-respondents' costs of the proceeding, including the cross-claim. (3) The cross-appeals be dismissed. (4) The respondents/cross-appellants pay 90% of the appellants/cross-respondents' costs of the appeal. (5) The respondents/cross-appellants pay the appellants/cross-respondents' costs of the cross-appeals. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Greenwood, Besanko and Katzmann.